Massmart shares crash by 4.85%, SA retailers under pressure

South Africa’s general retailers index posted its biggest daily loss in nearly two weeks on Monday, capping gains on the bourse after ratings downgrades last week knocked the rand currency, raising the prospect of inflation curbing consumption.

The rand extended its recent losses as the credit downgrades to “junk” by two ratings firms last week following the sudden firing of the finance minister kept investors jittery.

The general retailers index shed 2.77% on Monday, bringing its decline to around 12% since March 27 when President Jacob Zuma recalled finance minister Pravin Gordhan from an overseas investors roadshow, before firing him in a cabinet reshuffle.

Massmart, majority-owned by Wal-Mart, lead the way, falling 4.85%.

“It looks like people are starting to realise that these downgrades will cause the economy to slow down, that’s generally a negative for retailers,” said Cratos Capital equities trader Greg Davies.

Overall, the market closed higher. Advancers included Anglo American, which closed 1.6% higher after announcing it would sell its Eskom-linked thermal coal operations in South Africa for $166 million, marking an important step in strategic overhaul to sharpen its focus.